A* Ventures, a venture capital firm led by Kevin Hartz, Bennett Siegel, and Gautam Gupta, has successfully raised $315 million for its oversubscribed Fund II. The firm, which focuses on leading seed rounds and supporting portfolio companies at the Series A stage, plans to make select new investments at the Series B stage as well.
According to Siegel, A* Ventures has found its product market fit in partnering with founders at the seed and inception stage. This means the firm specializes in helping turn new, unproven concepts into successful companies with products and customers. They prioritize backing the right people and following them to whichever industry they are building in. Currently, A* Ventures is spending a significant amount of time in AI and the resurgence of consumer tech.
One notable change between Fund I and Fund II is the LP base. While Fund I was backed by well-known VCs and former operators like Max Levchin, David Sacks, and Peter Thiel, Fund II was raised entirely from institutional investors. This shift is common at the Fund II stage as firms attract institutional investors due to their track record and the need to grow their fund sizes in the future.
However, A* Ventures intentionally kept Fund II at a modest step up from its first fund. The firm believes that fund size is a strategy, and they want to be small enough to focus on generating incredible returns for their investors while providing mentorship to portfolio companies.
In Fund I, A* Ventures backed 35 startups, including notable companies like Ramp, Notion, and Faire. They also led seed rounds for companies like EyeTell, Paraform, and Aligned Marketplace. Additionally, the firm incubated three companies that are still in stealth mode.
A* Ventures believes it stands out in the crowded seed market due to its three founding partners and their extensive experience across industries and different decades. Hartz’s name recognition in the tech space, as the founder of Eventbrite and Xoom, adds to the firm’s credibility. Gupta’s experience as the former head of finance at Uber and COO/CFO at OpenDoor, along with Siegel’s investments in Peloton, Instacart, and DoorDash while at Coatue, further strengthen the firm’s expertise.
The founding partners of A* Ventures have known each other for years, and after discussing the idea of launching a fund in late 2020, they have now used Fund II to continue backing great early-stage founders in a rapidly evolving market. Hartz emphasizes that the challenge of their era is not starvation but indigestion for companies. A* Ventures aims to provide insights and assistance to hungry startups looking to go from zero to one, where capital is abundant.